Life insurance industry records modest one per cent growth for the first quarter of 2019

09 May 2019

The Life Insurance Association, Singapore (LIA Singapore) today announced a set of industry results for the period January to March 2019 (1Q2019).

Singapore’s life insurance industry recorded a total of S$937.2 million in weighted new business premiums1 for 1Q2019, a one per cent growth from the same period in 2018, in line with the nation's growth outlook for the quarter2.

 

Sustained uptake of annual premium products mitigates decreasing uptake of single premium products

There was continued steady increase in the uptake of annual premium policies in the first quarter, which rose by 11 per cent from the corresponding period in 2018, amounting to S$712.5 million in total weighted annual premiums.  

The industry’s uptake of single premium policies recorded a 20 per cent decline year-on-year, primarily due to subdued global and local economic growth3.

For 1Q2019, weighted single premiums amounted to S$224.7 million, of which:

a)  Single premium par and non-par products comprised 78 per cent; Single premium linked products took the remaining 22 per cent

b)  CPFIS-included products comprised 10 per cent; Cash-funded products took the remaining 90 per cent

Uptake of CPFIS-included products reduced this quarter, following the phased reduction of sales charge and wrap fees. Announced in March last year, the first phase came into effect in October 2018, with the second phase to take effect in October 20204.

 

Continued steady increase in uptake of retirement policies

By policy count, the industry recorded an 84 per cent increase in the uptake of retirement policies in 1Q2019. These policies are designed to provide regular payouts during policyholders’ retirement years.

12,213 policies were purchased, a significant 5,582 more policies compared to the previous year in which 6,631 policies were bought as at end March 2018. This also continues from last quarter’s year-on-year 48 per cent increase in the uptake of such policies with a total of 38,120 policies purchased in YTD 4Q20185.

Making up about 12 per cent of total weighted premiums for 1Q2019, retirement policies totalled S$109 million weighted premiums for this quarter.

 

Integrated Shield Plans (IPs) are still a significant component of health insurance

62,000 more Singaporeans and Permanent Residents were covered by IPs and riders as at 31 March 2019. 2.74 million lives - approximately 68 per cent of Singapore residents - are now protected by IPs and riders, which provide coverage on top of MediShield Life.

Total new business premiums6 for individual health insurance for 1Q2019 amounted to S$97.3 million.

Integrated Shield Plans (IPs) and IP rider premiums accounted for 86 per cent (S$83.8 million) and the remaining 14 per cent (S$13.5 million) comprised other medical plans and riders.

 

Industry’s digital transformation supported by expanding talent pool

The life insurance industry added 715 hires last year to reach a workforce of 8,309 employees as at 31 March 2019 with recruitment concentrated in areas of data analytics, cyber security, customer service and marketing as life insurers pursue digital innovation and business expansion.

The role of financial advisory representatives in Singapore remains essential, giving counsel and customising recommendations based on each individual’s circumstances and protection needs. 15,384 representatives held exclusive contracts with companies that operate a tied agency force as at 31 March 2019, 567 more than the corresponding 14,817 in 2018.

“Talent transformation is a top priority for the life industry in these immediate years, and we will reference insights from the recent study on manpower in the financial services sector jointly commissioned by the Institute of Banking and Finance (IBF) and the Monetary Authority of Singapore (MAS)7 to develop key initiatives. Our workforce needs to acquire new tech skills and new ways of doing their jobs, to transform how life insurance companies interact with consumers and serve customers” said Mr Khor Hock Seng, President of LIA Singapore.

 

Upcoming release of Protection Gap Study (PGS) qualitative findings

The industry recently completed the qualitative research of the PGS, where five consumer segments were identified based on their wants, motivations, considerations and challenges. More details will be shared in the first half of the year.

 

OTHER HIGHLIGHTS FOR 1Q2019

 

Product Classification

Par products accounted for 56 per cent of new sales while non-par products accounted for 26 per cent. Investment-linked products made up the remaining 18 per cent.

 

Distribution Channels

The contribution of new business by the different channels is as follows:

Distribution Channel By Weighted Premium (%) By Number of Policies (%)
Tied Representatives 32.2 52.4
Bank Representatives 40.6 13.3
Financial Adviser Representatives 22.3 20.0
Online Direct Channel 0.1 0.5
Others (products sold without intermediaries, e.g. DPI, ElderShield) 4.8 13.8

 

From 1Q2019, a new data point will be included, namely, Online Direct Channel, which refers to “any web portal or application in the internet created, developed and maintained or operated by a life insurer, on which a client may purchase a life policy”.

 
Product License Classification

As at 31 March 2019, insurers holding “Normal” licenses contributed 98 per cent of new sales, while the “Defined Market Segments” (DMS) insurers8 made up the remaining two per cent of new sales for 1Q2019.

 

Total Sum Assured

There was a quarter-on-quarter decrease of total sum assured for new business of four per cent, amounting to S$28.9 billion.

 

Group Insurance: Total Annual Premiums In-Force

Total annual premiums in-force for group insurance business rose by 13 per cent compared to the same period a year ago, amounting to S$1.25 billion.

 

Assets

Contributing to Singapore’s position as a leading global financial centre9, the life insurance industry managed assets of some S$209.4 billion, up three per cent compared with a year ago.

Assets of non-investment linked business accounted for S$175.5 billion, while the remaining S$33.9 billion were assets held for investment-linked business.

 

Looking Forward

A season of gentler growth presents a window of opportunity for the industry to strengthen deep expertise and build up new capacities to better serve consumers and bridge their protection gaps, by:

  • Transforming the workforce for the future, working closely with relevant parties to attract talent and upskill our current workforce;

  • Driving innovation to demystify life insurance, and using advanced technologies to make life insurance products more accessible; and

  • Enhancing public education to help bridge the protection gap.

 

End

Note to Editor: Industry results of YTD 1Q2019 are available at https://www.lia.org.sg/news-room/industry-performance/

 
In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan  Mar 2019
S$

Jan – Mar 2018
S$

Change
Single Premium 224.7 million 282.3 million -20%
  Linked 48.3 million 99.3 million -51%
  Non-linked 176.4 million 183.0 million -4%
Annual Premium 712.5 million 642.8 million 11%
Total 937.2 million 925.1 million 1%

Comparison with Last Quarter                     Jan  Mar 2019
S$

Oct – Dec 2018
S$

Change
Single Premium 224.7 million 308.2 million -27%
  Linked 48.3 million 62.1 million -22%
  Non-linked 176.4 million 246.1 million -28%
Annual Premium 712.5 million 761.1 million -6%
Total 937.2 million 1,069.3 million -12%

 

1 Weighted new business premiums measures premiums collected on new policies by taking into account (1) 10 per cent of the value of single premium products, (2) all of a year’s premiums for annual premium products, and (3) adjusted value for products with premium payment durations of less than 10 years. The figure is calculated as follows: 10% Single Premium Insurance + 100% Annual Premium Insurance + Adjusted premium for Insurance with premium payment durations of less than 10 years.

2 Steady labour market in Q1 despite slowdown (27 April 2019). The Straits Times. Available at: https://www.straitstimes.com/singapore/manpower/steady-labour-market-in-q1-despite-slowdown

3 Singapore economic growth to slow down amid weaker global prospects: MAS (26 April 2019). Yahoo Finance. Available at: https://sg.finance.yahoo.com/news/singapore-economic-growth-slow-amid-weaker-global-prospects-mas-063313954.html

4 Second phase of CPFIS fee cuts deferred to Oct 1 next year (12 March 2019). The Straits Times. Available at: https://www.straitstimes.com/business/economy/second-phase-of-cpfis-fee-cuts-deferred-to-oct-1-next-year

5 Life insurance industry recorded four per cent growth in 2018 (12 February 2019). LIA Singapore. Available at: https://www.lia.org.sg/news-room/industry-performance/2019/life-insurance-industry-recorded-four-per-cent-growth-in-2018/

6 With effect from 1 January 2016, the MediShield Life premiums have been excluded from LIA statistics. New Business premiums refer to the premium due to the new business sold in the year, as well as incremental premiums from any repricing of plans, and change in age-band of the insureds.

7 IBF-MAS study identifies skills for more competitive financial sector workforce (23 April 2019). Available at: https://www.ibf.org.sg/newsroom/Lists/Press-releases/Attachments/48/NewsRoomAttachment_636916572446336553.pdf

8 DMS insurers are registered by MAS to conduct only non-CPF business and with minimum policy size.

9 Singapore and Hong Kong remain among top global financial centres (15 September 2018). Insurance Business Asia. Available at: https://www.insurancebusinessmag.com/asia/news/breaking-news/singapore-and-hong-kong-remain-among-top-global-financial-centres-111368.aspx

 

Life Insurance Association, Singapore (LIA Singapore)

Established in 1962, the Life Insurance Association, Singapore (LIA Singapore) is the not-for-profit trade body of life insurance product providers and life reinsurance providers based in Singapore and licensed by the Monetary Authority of Singapore (MAS).

 

Vision and Mission

The vision of member companies is to provide individuals with peace of mind and to promote a society where every person is prepared for life’s changing cycles and for those situations unforeseen.

They are committed to being a progressive life insurance industry by collectively enhancing consumer understanding, promoting industry best practices, and through the association fostering a spirit of collaboration and mutual respect with government and business leaders.

 

Values underpinning the association and its members

Unified

in our resolve to deliver innovative solutions where every individual’s needs are best met.

Professional

in the way we conduct ourselves and in the counsel we give.

Ethical 

in ensuring our policyholders’ interests are managed with utmost integrity.

Fair        

in how we strive to provide favourable outcomes to both our policyholders and shareholders.

Open & honest

in all that we do to build an environment of trust and transparency.

Proactive

in the steps we take to give our people the skills and knowledge to provide sound solutions at all times.

 

For more information, please contact:

Pauline Lim (Ms.)
Executive Director, LIA Singapore
Tel: +65 6438 8900 / +65 9648 6407
Email : [email protected]

Amanda Chong (Ms.)
Ogilvy Singapore
Tel : +65 6213 7781 / +65 8200 5363
 Email: [email protected]

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